Zynga blamed the shortfall in earnings and its lowered outlook on several factors: general softness for existing titles, delay of The Ville people simulation game, changes that Facebook that seriously hurt engagement of older games, and a disappointing performance for the Draw Something mobile game. The consequences of the miss could be far-reaching.

Arvind Bhatia, analyst at Sterne Agee, said the Zynga problems bode ill for Facebook, which reports earnings today. Zynga’s market value, with its stock price at $3.15, is now $2.3 billion, well below its December initial public offering price of $10 a share and market value of $9 billion. Zynga’s stock price is a little embarrassing, considering it has $1.6 billion in cash.

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At the Casual Connect game conference in Seattle, lots of people were stunned at the weak earnings and sharp stock drop. The woes of the biggest casual game company were the topic of conversation at the conference parties on Wednesday night. Zynga still has 220 million monthly active users, but that figure is down from the past.

“I was very surprised,” said Lon Otremba, chief executive of Tylted and one of the 2,700 attendees at Casual Connect, in an interview with GamesBeat. “This isn’t good for the rest of the industry.”

Michael Pachter, analyst at Wedbush Securities, noted that investors had been banking on a good second half of the year for Zynga, but the guidance Zynga offered changed that view. The company guidance — that revenues would be 50 percent lower than previously expected — implies that the second half “will not be the stronger half, in direct contrast to management’s comments earlier this year,” Pachter said. He lowered his prediction for Zynga’s stock price over the next year from $17 a share to just $7.

Ben Schachter, an analyst at Macquarie Research, said the results were “shocking” and guidance of revenues raised “our worst fears about the stability of the business model and competitive positioning.” He lowered his price target from $7 to $3.50 a share. Zynga said its revenues are expected to be $1.15 billion to $1.225 billion for the year, compared with Wall Street’s previous expectations of $1.44 billion.

He wrote in a research note, “Our key long-term concern remains this: What is Zynga’s sustainable competitive advantage? On Facebook, it executed well against its first-mover status, but with changes from Facebook, this advantage is wearing thin and users seem less willing to pay.”

He added, “On mobile, thus far, Zynga looks little different to us than a myriad of other casual game companies. It has acquired some hit mobile titles that monetize reasonably well through advertising, but without first-mover advantage and a platform on which to scale, it has not yet been able to leverage mobile hits into significant successes for its other games.”

With the uncertainty, Schachter said, “We have little faith in our, or the company’s ability, to model revenue in either the near or long term. Additionally, while real-money gaming remains a potential positive catalyst, it is extremely difficult to quantify at this early stage and we prefer to see management at least begin to execute against the opportunity before giving them any credit. The bottom line is that Zynga over promised and significantly under delivered.”

Atul Bagga, analyst at Lazard Capital, also was disappointed. He said in a note that the “magnitude of the miss and the outlook revision make us concerned about users’ long-term value and Zynga’s ability to profitably re-engage with users.” He downgraded his recommendation on the stock from “buy” to “neutral.”

“The results were a surprise, and contradicted what we have picked up speaking with a few companies in the space,” Bagga said. “We believe that the miss could have partially stemmed from the loss of some of the super-high-paying users or “whales.” He said he was surprised by the “sudden change in fundamentals.”

Colin Sebastian, an analyst at R.W. Baird, also said the results were worse than anticipated. Users appear to be tired of “management style” simulation games, but the outlook in the long-run for mobile games is good, he said. Average daily bookings per daily active user, or the money coming from each paying user, declined 10 percent from the previous quarter. That means that existing games aren’t monetizing as they once were.